For example, the portion of the agreement quoted supra (p. 3) is silent on duration and the plaintiff produced no testimony that any person with, or without, authority agreed on behalf of Phoenix to pay these commissions indefinitely. By the same token, the defendant admits that it never specified that the override commission arrangement would continue only so long as the "broker of record" relationship existed. The defendant apparently relied upon custom within the industry but the court finds the evidence on this phase unconvincing.
In the absence of provisions specifying the period for which the split or override commissions are payable, the court concludes that eligibility is measured by the duration of the contract between the principal and its agent.
Because of the peculiarities of Pennsylvania insurance law, while a "broker" is recognized as an agent of the insured in the casualty and fire insurance fields and an "agent" is licensed as a direct representative of the insurer, no such distinction exists in the life insurance business. The Pennsylvania statutes specifically require that no life insurance may be written except by a licensed agent of the insurer. No provision is made for the legal status of a "broker" of life insurance. It is interesting to note that Golden Triangle Associates, even though dissolved, is still listed with the Insurance Department of Pennsylvania as an agent of the Phoenix Insurance Company, as are James, Pilarski, Matthews, and Casabona. These listings were made originally at the instance of the defendant and must be renewed annually by it.
Because of the provisions of the Pennsylvania statutes, therefore, the agreement reached between the parties on July 8, 1966 in effect recognized a dual arrangement. Phoenix acknowledged that Golden Triangle was "broker of record" for the Smaller Manufacturers Council, which, of course, was an arrangement between the Council and Golden Triangle which could be terminated at any time, and over which the defendant had no control. However, a relationship had been created between Golden Triangle and Phoenix, that being principal and agent, and to which the Council was not a party. No time was specified for duration or expiration.
Since there was no actual agreement between the parties as to how long this agency between Phoenix and Golden Triangle would continue, the relationship is presumed to be one terminable at will (2 C.J.S. Agency § 68). The evidence revealed that no action has yet been taken by Phoenix to affirmatively terminate the arrangement and it therefore would continue to this time together with the concomitant duty to pay "overrides" were it not for the superseding effect of the partnership dissolution which occurred in May of 1967.
The arrangement between a life insurance company and its agent is one for personal services, consisting primarily of the efforts of the agent to sell the coverages made available by the insurer, to a lesser extent to collect at least the initial premium, and to service complaints or claims of the insured.
The general rule is that a principal contracting with a partnership for personal services has a right to expect performance by each and every member of the firm and that the withdrawal by death, dissolution, or otherwise of one or more partners from the entity dissolves the contract between the partnership and the principal (2 C.J.S. Agency § 87b).
While this rule has been relaxed to some extent, see Knudsen v. Torrington Co., 2 Cir., 254 F.2d 283, it seems clear that the defendant relied more upon the efforts of James and Casabona rather than the plaintiff and therefore, even under the more liberal doctrine, Matthews as sole surviving partner carrying on as proprietor of Golden Triangle Associates is not the entity which the insurance company originally designated as its agent.
We find, therefore, that the contract between Phoenix and Golden Triangle Associates was one terminable at will, that no steps had been taken by either party to dissolve the agreement until May 31, 1967 when, by operation of law, the Court Order of dissolution ended the arrangement and the obligation of the defendant to pay "override" commissions for sales occurring after that date.
This opinion embodies the findings of fact and conclusions of law required by Rule 52. For completion of the record, the court has noted "affirmed" on the margins of certain requests for findings of fact and conclusions of law submitted by the parties.
ORDER OF COURT
And now, to-wit, this 9 day of September, 1970, since the court had ordered that this case be tried on liability first, with damages to be determined later by a Master agreed upon by the parties, the plaintiff and defendant are directed to confer and submit to the court within Fifteen (15) days the names of three persons considered satisfactory for appointment as Master.
PHOENIX MUTUAL LIFE INSURANCE COMPANY ONE AMERICAN ROW, HARTFORD, CONNECTICUT 06115
July 8, 1966
Mr. Warren W. James
Executive Vice President
Golden Triangle Associates
Suite 360, Gateway Towers
Pittsburgh, Pennsylvania 15222
While, within the next few weeks, you will be receiving much material on the Smaller Manufacturers Council group insurance program, the purpose of this letter is to confirm our conversation as far as commissions and "protection" are concerned with regards to the group life, weekly indemnity and major medical coverages.
A. no quotations will be given by Phoenix Mutual to any other brokers than yourselves on member firms of the SMC during the enrollment period which has been tentatively set from September 1, 1966 to December 31, 1966 -- nor will applications on such business be accepted by Phoenix Mutual without your authorization.
The exception to this latter statement would be if a case was sold as the result of a proposal issued prior to the start of the enrollment period in which case the "field service fee" arrangement as described below would come into play.
B. Similarly, no quotations will be given on member firms, whose date is obtained during the enrollment period by either Golden Triangle Associates or Phoenix Mutual Group representatives, for one year from the date data is obtained, without your authorization.
A. the commission rate on all business on which G.T.A. is the writing agent will be 20% First Year and 3% Renewal. This includes business closed by Phoenix Mutual group representatives during the enrollment period or within one year of the date employee data is obtained during the enrollment period.
Modified B. If a broker or a Phoenix Mutual agent brings in a member firm outside those circumstances governed by the "protection" guides above, the broker or agent receives 15%, and Golden Triangle Associates, the remaining 5%, first year commissions and the broker or agent receives 2%, and Golden Triangle Associates the remaining 1%, renewal commissions.
C. If a Phoenix Mutual group representative brings in a member firm, outside of the "protection" as outlined above, the first year commission to G.T.A. would be 10% instead of 20% but the renewals would remain the same.
We will be in touch with you very shortly, but if you have questions on the substance of this letter, please contact Jerry Campbell immediately.
It was good to meet you and we look forward to many years of mutually profitable activity.
Dennis F. Hardcastle
Second Vice President
cc: J. F. Campbell